Steps for Exporting Goods in India.

Step 1. Receipt of an order

The exporter has to get himself registered with various authorities like RBI, income tax authorities, etc.

In addition, he has to appoint agents or distributors for collection of orders from foreign countries.

Exporter receives an order from importer directly or through Indent House.

Step 2. Obtaining License and Quota

After obtaining order, exporter has to secure export license from the government. For this, he has to

apply to the Export Trade Control Authority and obtain the valid license. Quota is the total quantity of

goods that is permitted for exports.

Step 3. Letter of Credit

Exporter demands letter of credit from importer or sometimes importer may send it himself along with

the order.

It is a letter from a bank guaranteeing that a buyer's payment to a seller will be received on time and for

the correct amount. In the event that the buyer is unable to make payment on the purchase, the bank

will be required to cover the full or remaining amount of the purchase

Step 4. Fixing exchange rate

Exchange rate means the rate at which the currency of one country is exchanged for the currency of

another country. It fluctuates from time to time. Hence the exporter and importer fix the exchange rate

mutually.

Step 5. Foreign exchange formalities

Here the exporter has to undergo certain foreign exchange formalities as laid down under exchange

control regulations. According to FERA (Foreign Exchange Regulation Act of India) every exporter has to

furnish a declaration in the form prescribed for this purpose.

The declaration states:-

1. Foreign exchange earned by way of exports will be disposed in the manner and within the

period specified by RBI.

2. Negotiations of shipping documents will be through authorized dealers in foreign exchange.

3. The payment for goods exported will be collected only through approved method.

Step 6. Preparation for executing the order

The exporter makes necessary arrangements for executing the order.

In this respect he performs the following activities:-

1. Packing and marking of the goods as per the specifications of the importer.

2. Arranging the pre-shipment inspection by the Export Inspection Agency and getting the

inspection certificate from it.

3. Securing insurance policy from the Export Credit Guarantee Corporation (ECGC) to get

protection against the credit risks.

4. Obtaining a suitable marine insurance policy, consular invoice and certificate of origin, if

required.

5. Appointing a forwarding agent for handling the customs and forwarding activities.

Step 7. Formalities done by forwarding agent

The Forwarding Agent completes the following formalities:-

1. He obtains the Customs' Permit from the Customs Department for exporting goods.

2. The Forwarding Agent discloses the details of the goods such as their nature, size, quantity,

weight, etc. to the shipping company.

3. The Forwarding Agent prepares a Shipping Bill.

4. The Forwarding Agent prepares two copies of the dock challans and pays the dock dues.

5. The Captain of the ship gets the goods loaded on the ship on the basis of the Shipping Order in

the presence of customer officers.

6. When the goods are loaded on the ship, the Mate (Vice Captain or the Captain) issues a receipt,

called Mate's or Captain's Receipt.

Step 8. Bill of Lading

The exporter approaches the shipping company, presents the Mate's Receipt and in exchange receives a

document called Bill of Lading. It is an official receipt given by the shipping company as an

acknowledgement of the receipt of goods to be transported to the port of destination. It is also a

contract for the carriage of goods. It gives full description of goods loaded on the ship, name of the port

of destination, etc.

Step 9. Shipment advice to importer

The exporter sends Shipment Advice to the importer informing him about the dispatch of the goods. He

sends a copy of packing list, commercial invoice and a non-negotiable copy of the Bill of Lading, along

with the Advice Note.

Step 10. Presentation of documents to the bank

The exporter confirms that he has secured a complete set of the shipping documents namely, the Bill of

Lading, Marine Insurance Policy, Certificate of Origin, the Consular Invoice and the Commercial Invoice.

He then draws a bill of exchange on the basis of the commercial invoice. The bill of exchange

accompanied by these documents is called Documentary Bill of Exchange. Such a bill may be a D/P

(Documents against payment) bill or D/A (Documents against Acceptance) bill. The exporter hands over

the documentary bill to his bank.

Bill Of Lading

A legal document between the shipper of a particular good and the carrier detailing the type, quantity

and destination of the good being carried. The bill of lading also serves as a receipt of shipment when

the good is delivered to the predetermined destination. This document must accompany the shipped

goods, no matter the form of transportation, and must be signed by an authorized representative from

the carrier, shipper and receiver.

Marine insurance covers the loss or damage of ships, cargo, terminals, and any transport or

cargo by which property is transferred, acquired, or held between the points of origin and final

destination.

A Certificate of Origin (CO) is an important international trade document attesting that goods in

a particular export shipment are wholly obtained, produced, manufactured or processed in a

particular country.

Consular Invoice

A document certifying a shipment of goods and shows information such as the consignor,

consignee and value of the shipment. A consular invoice can be obtained through a consular

representative of the country you're shipping to. The consular invoice is required by some

countries to facilitate customs and collection of taxes.

Commercial Invoice

Document required by customs to determine true value of the imported goods,

for assessment of duties and taxes. A commercial invoice (in addition to other information),

must identify the buyer and seller, and clearly indicate the (1) date and terms of sale,

(2) quantity, weight and/or volume of the shipment, (3) type of packaging, (4) complete

description of goods, (5) unit value and total value, and (6)insurance, shipping and

other charges (as applicable).

Step 11. Realization of export proceeds

For realization of export proceeds, the exporter has to undergo certain banking formalities. Generally he

receives payment in foreign currency by bill of exchange or by bank draft.

Step 12. Follow up

After the sales, exporter should always have a follow-up, to find out buyer's reactions towards the

goods. Such follow up builds goodwill and the exporter can get more and more orders in future.